Kathmandu, June 26

Dampened investor morale due to unclear policies of the government caused Nepal Stock Exchange (Nepse) index to shed 15.29 points or 1.26 per cent to close at 1,194.80 points today.

After hitting a record high of 1,881.45 points on July 27, 2016, the benchmark had slumped to a two-year low at 1,168.55 points on March 26 this year. Share investors attributed the dive to the statement made by Finance Minister Yubaraj Khatiwada against speculative stock prices immediately after being appointed as the finance minister.

“The market sentiment has been hit time and again due to various statements made by the government. Also, the tax administration’s new rule — which is currently under review in the finance ministry — on calculation of capital gains tax on rights and bonus share has terrorised the investors,” said Ambika Prasad Poudel, chairman of Investors Forum.

“On the other hand, Securities Board of Nepal has randomly allowed banks and financial institutions to issue further public offerings,” he said. He added that the price and volume of the shares under FPO should have been regulated in a scientific manner.

Also, investors who had availed margin lending facility are under pressure to repay the loans and interests as the banks have been corresponding with them to recoup the loans with the fiscal year-end approaching, according to Prakash Rajaure, a stock market analyst. “The selling pressure in the stock market could continue till the fiscal-end.”

“As the government will come up with a new decision on CGT calculation from the new fiscal, small and medium investors are trying to offload their shares,” stated Poudel. “The government has not even bothered to consult the investors though the stock market has been in a bearish trend since the last several months.”

In an interview with The Himalayan Times two weeks back, Minister Khatiwada had urged investors to be aware of the risks involved in their investment citing investing without assessing the risks could lead to a crisis.

Analysts have said that the finance minister’s statement has impelled investors to offload shares in the secondary market. Investors said that margin lending is not at a significant volume as banks can lend only 50 per cent of the market value of the stocks against the collateral of stocks and they can lend only at the level of their core capital.

Opening at 1,210.10 points today, the benchmark index was mostly southbound throughout the day. The sensitive index also dropped 3.11 points or 1.22 per cent to 250.86 points and float index fell 1.12 points or 1.29 per cent to 85.67 points.

All the sub-indices recorded losses today in the country’s only trading bourse. Banking subgroup, which has the highest weightage in benchmark index, fell 12.73 points or 1.24 per cent to 1,010.28 points.

The hotels subgroup dipped by 2.81 per cent or 52.02 points to land at 1,796.81 points. Similarly, manufacturing and production dropped by 2.16 per cent or 50.93 points to rest at 2,304.22 points. Likewise, the insurance and hydropower sub-indices dipped by 1.28 per cent or 78.07 points and 0.75 per cent or 11.08 points to close the day at 6040.83 and 1475.09 points, respectively.

Development banks and finance company sub-indices went down by 14.72 points or 1.04 per cent and 5.28 points or 0.86 per cent to land at 1,395.34 points and 610.41 points, respectively. Similarly, others and microfinance subgroups also descended by 0.75 per cent or 5.31 points and two per cent or 32.17 points to land at 704.47 points and 1,575.37 points, respectively.

Altogether, 3,623 transactions of 621,796 shares of 160 firms worth Rs 231 million were undertaken today.